Next plc delivered yet another set of impressive results and expressed confidence in weathering supply chain issues and labour shortage over the next months.
However, the FTSE 100 retailer invited the government to relax immigration rules, warning it may experience “some degradation” in the service in the run-up to Christmas.
“As yet, we are not experiencing material difficulties in recruiting for stores and most head office functions. However, some areas of the business are beginning to come under pressure, most notably staffing for peak seasonal demand in warehousing and logistics,” the high street powerhouse said.
“The HGV crisis was foreseen, and widely predicted for many months. For the sake of the wider UK economy, we hope that the Government will take a more decisive approach to the looming skills crisis in warehouses, restaurants, hotels, care homes, and many seasonal industries. A demand-led approach to ensuring the country has the skills it needs is now vital.”
Chief executive Simon Wolfson, a Conservative peer and ardent Brexit supporter, told Reuters that Christmas deliveries will be somewhat impacted but not heavily disrupted.
“I don’t think we’ll get to the point where we say ‘we can’t take any more orders’. That will not happen,” he said. “But it may be that the service levels we provide in that peak period won’t be as sharp as the ones that we provide through the rest of the year.”
Next-day deliveries may have to be booked by 4pm instead of 11pm “or at worst maybe move to a two-day delivery,” Wolfson said.
The group also expects fashion prices to increase by 1%, with homewares rising by as much as 6% in the first half of next year.
“This is all largely outside Next’s control and given these issues are affecting so many businesses, customers are unlikely to punish Next too much,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.
“The challenge will be making sure disruption and price hikes are managed as well as possible to limit unnecessary and avoidable customer backlash. Next’s considerable presence in more popular out-of-town retail parks should also continue to help it perform better than peers, as more shoppers spruce up their wardrobe for office and social events, in the run up to Christmas.”
Shares in Next jumped 3% to 8,292p on Wednesday afternoon, rising 20% in the year to date.